Iberiabank has grown its business through careful risk-taking in recent years, exec says

Entrepreneurial zest and strong risk management have helped IberiaBank Corp. nearly double in size in three years at a time when much of the banking industry is shrinking, an Iberia executive told the local chapter of the Association for Corporate Growth Tuesday.

"Our industry tends to stick to what it knows and allow the market to drive it," Iberia vice chairman and chief operating officer Michael Brown told about 50 people gathered for a lunchtime speech at the InterContinental New Orleans hotel.

Unlike many other banks, Iberia has taken careful risks, and while the industry is consolidating, Lafayette-based Iberia has been starting new businesses and laying the groundwork for expansion across the South.

"Iberia has tried to take advantage of the downturn to position ourselves for growth," Brown said. "We have spent a great deal of time building a platform."

For most of Iberia's 124 years, the company was a sleepy thrift focusing on home mortgages. But in the 1990s, Iberia converted to a commercial bank and started trying to grow.

When chief executive Daryl Byrd arrived in 1999, Brown recounted, the company had about $1 billion in assets. It now has about $12 billion, with much of that growth coming in just the past few years.

It wasn't until after Hurricane Katrina that Iberia ventured out of Louisiana. The company decided it wasn't good to have 80 percent of its assets on the Gulf Coast, and sought to diversify geographically. It now hasbanking operations in six states.

Its first move was to acquire a failed bank in Arkansas from the Federal Deposit Insurance Corp., a move that not only got Iberia into another state, but taught it how to work through the FDIC process.

Since then, Iberia has bought four more failed banks from the FDIC, including some that got it into Florida, which Iberia views as a long-term growth market. Because the FDIC covers losses from failed banks when they're bought out, Brown said they're excellent low-risk ways to get into new markets, and as a result, a large proportion of the Iberia's portfolio is low-risk.

Iberia management believes that there will be more opportunities to buy banks through the FDIC. "There's still a ways to go," Brown said.

The company also believes that it will have the chance to pick up more "live" banks as it did with its purchases of Omni Bancshares of Metairie and Cameron Bancshares of Lake Charles, which closed May 31. As companies get sick of dealing with new regulations, executives want to get out of the business, and boards get tired of seeing poor financial returns, more companies will be put up for sale, Brown said.

But not all of Iberia's growth has been through acquisition, Brown said.

The company has also grown by recruiting seasoned executives in other markets who can help facilitate growth or be on the look out for attractive acquisition candidates. Iberia has several executives that live in places such as North Carolina, where the company doesn't actually have any bank operations. Brown said this is unusual in the banking industry, but is a good way to recruit top people and lay foundations for growth. "If you're doing your job, you're not going to be there very much," Brown said, explaining why a bank office doesn't matter.

Iberia also has grown organically in the markets in which it operates. As the company has gotten bigger, it's been able to provide new services to clients, such as wealth management, investment research and brokerage services, which in turn allows it to make more money.

It has also been able to poach business from other banks. With the economic recovery going so slowly and most of the banking industry retrenching, stealing business away from competitors is an important source of growth. "We grow by taking (market)share from other people," Brown said. "The industry is basically shrinking."

Iberia's strong capital position has helped in recruiting both new customers and workers, as well as in having the ability to acquire other banks.

The company's strongest growth markets are Houston and Alabama.

New Orleans was traditionally a commercial and private banking market for Iberia, but the Omni acquisition should help change that profile. "As we expand here, we need more distribution, and a small business team," Brown said.

Rebecca Mowbray can be reached at rmowbray@timespicayune.com or 504.826.3417.